As you are aware there was a terrorist attack took place at Pulwama on 14 February 2019. On 16 February 2019, the Union Government issued a notification under Section 8A of the Customs Tariff Act 1975. The notification introduced a tariff entry by which all goods originating in or exported from the Islamic Republic of Pakistan were subjected to an enhanced customs duty of 200%. The precise time at which the notification was uploaded on the e-Gazette was 20:46:58 hours. But the bill of entry filed on same day i.e 16th February 2019 seeking clearance of the PAK origin goods for home consumption and was self- assessed at 18:08 hours on same day under the provisions of Section 17(1) of the Customs Act 1962
Customs authorities at the land customs station at Attari sought to enforce the enhanced rate of duty on importers who had already presented bills of entry for home consumption before the enhanced rate was notified in the e-Gazette. Their action led to a challenge before the High Court of Punjab and Haryana. The consignments of import covered a diverse range of goods, ranging from dry dates to cement.
The High Court of Punjab and Haryana allowed a batch of writ petitions under Article 226 of the Constitution. The High Court held that since the importers, who had imported goods from Pakistan, had presented their bills of entry and completed the process of “self assessment” before the notification enhancing the rate of duty to 200 per cent was issued and uploaded, the enhanced rate of duty was not attracted. The High Court held that the importers were liable to pay the duty applicable at the time when the bills of entry for home consumption were filed under Section 46 of the Customs Act, 1962. The Union of India was ordered to release the goods within seven days on the payment of duty ‘as declared and assessed’ without applying the notification enhancing the rate of duty on goods originating in Pakistan.
The Union of India has appealed to Supreme Court. Apex Court’s important observations as follows ;
The notification contains a reference to the date (16 February 2019) and time (20:46:58) at which it was uploaded and published in the e-Gazette of the Government of India. Based on the enhancement in the rate of duty brought about by the notification, the customs authorities refused to release the goods which were assessed earlier. The bill of entry was recalled and reassessed on 20 February 2019 at 18:14 hours by levying customs duty at 200 per cent and IGST at 28 per cent, enhancing the duty from ₹ 73,342/- to 8,10,952/-. Aggrieved by the action of the customs authorities, the importer filed a petition under Article 226 for setting aside (i) the assessment of the bill of entry to a duty of 200%; (ii) Notification 5/2019 dated 16 February 2019; and for a direction to CWC to issue a detention memo and the release of the goods.
Section 46(1) stipulates that the bill of entry has to be presented in the form and in the manner ‘prescribed’. The expression ‘prescribed’ is defined in Section 2(32) to mean prescribed by regulations made under the Act. The Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations 2018 have been made in pursuance of the enabling power conferred by Sections 46 and 47 and Section 157 which contains a general power to make regulations.
Section 157(2)(a) was amended by the Finance Act 2018 (Act 13 of 2018) to allow for the power to frame regulations on the form and manner of delivering or presenting inter alia a bill of entry. Regulation 2(c) of the 2018 Regulations defines the expression bill of entry in the following terms:
“(c) “bill of entry” means electronic integrated declaration accepted and a unique number generated and assigned to that particular bill of entry by the Indian Customs Electronic Data Interchange System, and includes its electronic records or print-outs”
Regulation 2(d) defines the expression electronic integrated declaration:
“(d) “electronic integrated declaration” means particulars relating to the imported goods that are entered in the Indian Customs Electronic Data Interchange System”
Under Regulation 2(e), “ICEGATE” is the customs automated system of the Central Board of Indirect Taxes and Customs. Regulation 3 requires the authorized person (defined in Regulation 2(b) 7 2(b) “authorised person” means an importer or a person authorised by him who has a valid licence under the Customs Brokers Licensing Regulations, 2013 or any other regulation dealing with the similar matters and it also includes an employee of the Customs broker who has been issued a photo identity card in Form G under the Customs Brokers Licensing Regulations, 2013 or any other regulation dealing with the similar matters), which includes the importer, to enter the electronic integrated declaration and supporting documents by affixing a digital signature. Regulation 3 is as follows:
“The authorised person shall enter the electronic integrated declaration and the supporting documents himself by affixing his digital signature and enter them on the Customs Automated System and he may also get the electronic integrated declaration made on the customs automated system along with the supporting documents by availing the services at the service centre.”
With the change in the manner of publishing gazette notifications from analog to digital, the precise time when the gazette is published in the electronic mode assumes significance.
Notification 5/2019, which is akin to the exercise of delegated legislative power, under the emergency power to notify and revise tariff duty under Section 8A of the Customs Tariff Act, 1975, cannot operate retrospectively, unless authorized by statute.
In the era of the electronic publication of gazette notifications and electronic filing of bills of entry, the revised rate of import duty under the Notification 5/2019 applies to bills of entry presented for home consumption after the notification was uploaded in the e-Gazette at 20:46:58 hours on 16 February 2019.
Once it is found that the notification upon publication would take effect from the time of its publication then in regard to the bills of entries which stand presented within the meaning of Section 46 of the Customs Act read with 4(2) of the 2018 Regulations, earlier to such publication, the rate of duty in regard to the same would be only the rate of duty which prevailed at the time of the deemed presentation under Regulation 4(2) of the 2018 Regulations.
The purpose of the notification being to discourage the import of goods from Pakistan, it has prospective effect: the object and purpose is not to penalize Indian importers who had completed their imports, presented bills of entry for home consumption and had completed self-assessment in terms of the provisions of the Customs Act and the Regulations, prior to the issuance of the notification
Hence old rate of duty only applicable to the importers whose BoE self assessment digital signature date and time stamp is prior to new notification e gazette date and time stamp.
This case may become a landmark case in future !!!
UNION OF INDIA & OTHERS VERSUS M/S GS CHATHA RICE MILLS & ANOTHER, SUPREME COURT, decided 23.09.2020
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